Making the Decision to Create a Start-up Company.
Start-Up
Companies
Under
some circumstances, it may be preferable to take a technology to the marketplace
through a start-up company. University policy allows faculty to be shareholders,
advisors/consultants or directors in such a company, but they may not be
an officer of the corporation or have direct responsibility for operation
of the company while maintaining a full-time faculty position. Before a
license is granted to a start-up company, the company must demonstrate
its capabilities to properly commercialize the technology.
A Business Plan
must be submitted and approved. The plan must include a well-balanced management
team, identification of the target market, a plan and schedule for product
development, a marketing plan, financial documents that cover company operations
until profitability is expected, and commitments for the required financing.
A license agreement will be negotiated with the start-up company that will be very similar to agreements with established companies; however, the licensing fee will usually be in the form of stock in the company in order to conserve the cash needed for company operations.
There is a sequence of questions to be answered prior to making a decision of creating a start-up venture. Some of them are:
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Is there a good reason for licensing the technology to a start-up corporation instead of established corporation?
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What level of authority will be needed for each of the decisions to be made (policy, licensing, oversight)?
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Who should be consulted or informed?
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If approved, how will the proposed relationship be monitored?
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Who will do it?
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What will be the relationship of the proposed company and the principals to the University?
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How will the technology related issues (ownership, pre-existing rights, intellectual property protection, licensing) be evaluated, handled, and negotiated in the process?
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Have all possible conflicts of interest, real and apparent, been considered?
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How will disclosed information be handled?
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Have the decisions been documented for the files?
Commercialization via Start-up Company
Increasingly,
at universities, faculty, staff and students are interested in seeing their
research results reach the marketplace by starting a new company rather
than the more traditional way of licensing the technology to an existing
company. The Technology Transfer Office staff is prepared to assist in
this process by offering the following services:
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Identification of Commercialization Options: Through an initial meeting and follow-up, the Technology Transfer Office staff learns about the business opportunity and discusses various ways to move it forward. Technology Transfer Office staff present and discuss the attached Checklist of issues for a start-up company at UNCG.
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Business Opportunity Analysis: Following an agreement to work together, Technology Transfer Office staff will work with the researcher to understand the research background and its applicability to particular markets. A Business Opportunity Document will be prepared which, in 1 -2 pages, describes: the opportunity (how the products will make money); the technology; the intellectual property situation; the products/services arising from the technology; the markets; the commercialization process; and next steps.
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Preparation of a Commercialization Plan: A brief document outlining why a start-up company is appropriate, how ownership might be apportioned, legal incorporation of a company; company site, financing of the company, Business Plan preparation, and company management.
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Dealing with the University: The Technology Transfer Office staff can assist researchers to address and resolve the following issues:
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internal UNCG sign-off/information to appropriate administrators.
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how to provide a portion of commercialization proceeds to all parties who have such an expectation - students, other faculty, the University.
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UNCG may have an interest in the intellectual property through policy or prior funding. This needs to be resolved and documented in an agreement.
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structural relationships with UCNG - will UNCG hold equity, will the company launch initial activities while housed at the university, technology transfer into the company, etc.
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- Preparation
of the Business Plan: A plan is required to run the company,
and provide performance milestones for any license. Technology Transfer
Office staff can assist researchers in its preparation. A plan normally
discusses how the necessary human and financial resources can be
gathered to create a product flow, which is put into the market to
satisfy a need and create a cash flow, which allows the company to
survive and grow. This document is an expansion of the Business Opportunity
Document, but provides more description, details the financial projections
including cash flow, as well as describing the investment opportunity.
Such a plan has a series of action plans for product development;
market development including sales and marketing; obtaining investment;
strategic partnering, etc. There must be specific information about
governance (Board of Directors) and advice (business mentors and
advisors). The individuals who will manage the company prepare the
plan. The Technology Transfer staff can provide comments on a draft
plan.
- Launching Company Activities: As company activities increase, hands-on involvement by the Technology Transfer Office will decrease - - the sooner the company has its own employees and advisors, the better it will survive in the marketplace. The Technology Transfer Office will monitor company activities in a manner, which is negotiated, and can continue to provide advice and assistance as mutually agreed upon.